According to a UBS research note issued this morning, the timing might be right for someone to swoop in on the embattled gear vendor. Theodosopoulos writes:
We believe TLAB stock is not factoring any M&A premium, unlike in 2007. The current CEO announced his resignation in November 2007, and the Chairman & founder Mike Birck is not likely to return at 69 years of age. With two CEOs resigning since 2002, no obvious internal replacement, a low growth industry, and low stock valuation, we believe this could be the year TLAB gets acquired.
Of course, speculation of a Tellabs buy is nothing new. Last year was rife with rumors of the company being taken out by Nortel Networks Ltd. , Nokia Networks , and various private equity firms. (See Nortel Takes a Look at Tellabs, Is Nokia Siemens Tailing Tellabs?, Tellabs Mum on M&A Talks, and Tellabs Still Stands Alone.)
The question is whether it would make sense for any of those firms to purchase the company in 2008, even without a premium on the stock.
Heavy Reading analyst Sterling Perrin says he doesn't see companies like Nokia Siemens or Nortel getting a lot of value out of buying Tellabs. "It's tough to see more benefits than negatives coming out of buying the company," he says.
Perrin thinks it makes more sense for Tellabs to go private. "My gut says it would be more likely to see a private-equity buyout where they would cut costs to make this a more profitable business."
Either way, we can probably look forward to a whole new year of Tellabs M&A rumors.
— Ryan Lawler, Reporter, Light Reading